137.

Analysis of Minarik

A. The Motions to Dismiss Count 1 Should Be Denied

XXXXX, joined by XXXXXXXX and XXXXXXXX, has filed two separate
motions to dismiss Count 1 of the Indictment. The first motion
claims
that Count 1 fails to allege an offense under 18 U.S.C. § 371.
The
second motion contends that Count 1 impermissibly combines felony
and
potential misdemeanor charges. Neither motion has any merit.

XXXXXX bases his first motion on the proposition that the
government has failed to properly allege an offense under the
"defraud
clause" of the conspiracy statute. Section 371, 18 United States
Code,
provides:

If two or more persons conspire either to commit any
offense
against the United States, or to defraud the United States, or any
agency thereof in any manner or for any purpose, and one or more of
such
persons do any act to effect the object of the conspiracy, each
shall be
fined not more than $10,000 or imprisoned not more than five years
or
both.

The first clause is commonly known as the "offense clause" and the
second clause is referred to as the "defraud clause." To establish
a
violation of the "defraud clause," the government need not show
that a
defendant intended to cheat the United States or one of its
agencies out
of money. Rather, as the Supreme Court stated in Dennis v.
United
States, 384 U.S. 855 (1966):

It has long been established that this statutory
language is
not confined to fraud as that term has been defined in the common
law.
It reaches "'any conspiracy for the purpose of impairing,
obstructing,
or defeating the lawful function of any department of government.'"

In addition, it is not duplicitous for the government to
charge as
a single offense under 18 U.S.C. § 371 one conspiracy whose
objects
include violations of both the "offense clause" and the "defraud
clause." United States v. Bilzerian, 926 F.2d 1285, 1301-02
(2d
Cir.), cert. denied, ___ U.S. ___, 112 S. Ct. 63 (1991)
("[The
government] may simultaneously prosecute the same conduct under
both
clauses."); United States v. Smith, 891 F.2d 703, 712-13
(9th
Cir. 1989), cert. denied, ___ U.S. ___, 111 S.Ct. 47 (1990)
("The
clause 'defraud the United States' merely expands the scope of the
offense by including another object of the conspiracy that might
not
otherwise be covered by the clause 'any offense.'"); United
States v.
Hope, 861 F.2d 1574, 1578 n.8 (11th Cir. 1988). SeealsoBraverman v. United States, 317 U.S. 49, 54
(1942)
("The allegation in a single count of conspiracy to commit several
crimes is not duplicitous . . . .").

Thus, Count 1 properly charges a single conspiracy with three
objects. Two of the objects of the conspiracy -- to violate the FDC
Act
and to violate the mail and wire fraud statutes -- fall within the
"offense clause" of § 371. The third object of the conspiracy
is "to
defraud the United States . . . by obstructing, hampering,
hindering,
frustrating, defeating, impairing, and impeding by craft, trickery,
deceit, and dishonest means the United States Food and Drug
Administration ("FDA") of its lawful and proper government
functions of
monitoring and controlling the manufacture, distribution, and sale
of
orange juice from concentrate and concentrated orange juice for
manufacturing." Indictment at p. 2, ¶ 2. This object of the
conspiracy falls within the "defraud clause" of § 371.

XXXXXX argues that the Sixth Circuit's decision in United
States
v. Minarik, 875 F.2d 1186 (6th Cir. 1989), renders the
allegation
that defendants conspired to defraud the United States defective.
See Memorandum in Support of XXXXXX's Motion to Dismiss
Counts
[sic] One ("XXXXXX Dismiss Mem."). He further claims that the
purported
defect warrants dismissal of the entire count. Id.Minarik, both standing alone and as interpreted by
subsequent
Sixth Circuit decisions, does not lead to the result that XXXXXX
demands.[FN1]

FN1. Even if the Court should conclude that, under
current
Sixth Circuit law, Count 1 of the Indictment does not adequately
set
forth an offense under the "defraud clause," the proper remedy
would be
to strike that portion of Count 1 that alleges defrauding the
United
States as an object of the conspiracy, not to dismiss the entire
count.
SeeUnited States v. Gibson, 881 F.2d 318, 320-21
(6th
Cir. 1989). XXXXXX does not (and cannot) contend that Count 1 also
fails
to properly allege a conspiracy to commit offenses against the
United
States.

In Minarik, one of the defendants, XXXXXXX, received
three
tax assessment notices informing her that she owed the IRS over
$100,000. 875 F.2d at 1187. Shortly afterward, XXXXXXXX and her
co-defendant, Minarik, arranged to sell some property XXXXXXXX
owned.
Id. In structuring the sale, Minarik and XXXXXXXX required
the
purchaser to pay the sales price with several cashier's checks,
each in
an amount under $5000. Id. When XXXXXXXX began cashing the
checks
at several branches of the same bank, the bank notified the IRS.
Id. IRS agents detained XXXXXXXX and Minarik and searched
their
car. Id. at 1188.

XXXXXXXX and Minarik were subsequently charged in a one-count
indictment with conspiracy to defraud the United States. Id.
In
describing the object of this conspiracy under the "defraud
clause," the
indictment merely stated that it was to interfere with "the lawful
functions of the Department of Treasury." Id. The indictment
thus
failed to delineate "[w]hich of the many functions entrusted to the
Treasury Department defendants were alleged to have agreed to
impede . .
. ." Id. at 1189.

Moreover, throughout the prosecution, the government changed
its
theory of the case. Id. At one point, the government
maintained
that the defendants defrauded the Treasury Department by "selling
XXXXXXXX's house in a way that would avoid the currency reporting
requirements of 31 U.S.C. § 5313(a)." Id. This theory
was
later dropped. Id. At another point, the government stated
that
the fraud against the United States was that "the defendants,
having
received XXXXXXXX's notice of assessment, sought to conceal assets
to
avoid levy by the IRS." Id. at 1190. It abandoned this
theory,
too. Id. Finally, the prosecution also was unable to settle
on a
theory of the legal duty that the defendants owed to the
government, a
breach of which rendered them guilty of a crime. Id.

Against this backdrop, the Sixth Circuit concluded in
Minarik that "the Government's failure to specify the crime
with
which it charged the defendants has generated unacceptable
confusion."
Id. Accordingly, it ruled that:

[T]he "offense" and "defraud" clauses as applied to
the
facts of this case are mutually exclusive, and the facts proved
constitute only a conspiracy under the offense clause to violate 26
U.S.C. § 7206(4), [a provision of the tax laws making it
illegal to
conceal assets subject to levy after notice and assessment of a tax
has
been issued].

Id. at 1187 (emphasis added).

Of key importance to the Sixth Circuit in Minarik was
the
fact that, depending on the circumstances, the conduct with which
the
defendants were charged could be legal. Id. at 1194-95.
However,
by indicting under the "defraud clause" of § 371, the
government
failed to give the defendants adequate notice of what they did
wrong and
when, and thereby interfered with their right to prepare for trial.
Id. at 1189, 1195. By contrast, if the government had used
the
"offense clause" of § 371 and charged a conspiracy to violate
26
U.S.C. § 7206(4), the defendants would have been apprised of
the
legal duty that they breached -- in their case, not to conceal
assets
subject to levy after receiving a tax assessment notice --and been
able
to defend themselves accordingly. Thus, the Sixth Circuit
concluded:

[W]here the duties of a citizen are as technical and
difficult to discern as they are when a taxpayer, before levy,
engages
in otherwise legitimate activities that may make ultimate
collection
more difficult, we hold that a Congressional statute closely
defining
those duties takes a conspiracy to avoid them out of the defraud
clause
and places it in the offense clause.

Id. at 1196. The Sixth Circuit also acknowledged the narrow
breadth of its decision. It expressly stated:

At the same time, it is important to emphasize the
limits of
our holding today. We do nothing to disturb the well-settled
principle
that modern criminal statutes defining new offenses do not
necessarily
erode or displace § 371 conspiracy liability in general.

Id. at 1195-96.

In cases decided after Minarik, the Sixth Circuit has
made
it clear that the holding in Minarik is limited to the
unique
factual circumstances present in that decision. In particular, the
Sixth
Circuit has not interpreted Minarik to mean that, whenever
the
conduct underlying a conspiracy may also be charged as a violation
of a
particular statute or statutes, the government must always charge
the
conspiracy under the "offense clause" and may never invoke the
"defraud
clause."

In United States v. Mohney, 949 F.2d 899 (6th Cir.
1991),
the district court had dismissed a count in an indictment charging
the
defendants with conspiracy to defraud the United States by impeding
the
IRS from learning the true ownership of certain businesses and the
sources and disposition of funds that passed through those
operations.
949 F.2d at 900. The district court had ruled that Minarik
required dismissal of the conspiracy count, which alleged an
offense
under the "defraud clause" of § 371, because specific statutes
covered the conduct that underlay the conspiracy. Id. The
Sixth
Circuit reversed. It held:

After studying Minarik, as well as the present
case,
we conclude that the district court misread Minarik when it
dismissed Count I based on that holding. The court in
Minarik
reached its decision based on the specific facts of that case.
Minarik did not require that all prosecutors charge all
conspiracies
to violate a specific statute under the offense clause of section
371.

949 F.2d at 902 (emphasis added).

The Mohney court stressed that to interpret
Minarik
as precluding a charge under the "defraud clause" whenever specific
statutes are available to support a charge under the "offense
clause"
would be contrary to the broad language of § 371, contrary to
Supreme Court precedent,[FN2] and contrary to the discretion that
the
prosecution has to charge a case under the applicable statute of
its
choice. Id.SeealsoUnited States v.
Sturman, 951 F.2d 1466, 1473-74 (6th Cir. 1991), cert.
denied, 112 S.Ct. 2964 (1992).[FN3]

FN2. In Dennis v. United States, supra,
the
Supreme Court considered the adequacy of an indictment charging the
defendants with conspiracy to defraud the United States through the
filing of false affidavits with the National Labor Relations Board.
Such
conduct is illegal under 18 U.S.C. { 1001. Nonetheless, the Supreme
Court stated: "The fact that the events include the filing of false
statements does not in and of itself, make the conspiracy to
defraud
clause of { 371 unavailable to the prosecution." 384 U.S. at
863-64.

In Mohney, the Sixth Circuit noted three factors that
could
create a situation similar to that in Minarik and therefore
render the "defraud clause" inapplicable. None of these factors is
present in this case.

First, the court in Mohney stated that a charge under
the
"defraud clause" might suffer from vagueness and thus fail to
inform the
defendant of the charges pending against him. 949 F.2d at 902. That
was
the principal defect with the indictment in Minarik, which
merely
described the object of the conspiracy as being to defraud the
United
States by impeding the functions of the Treasury Department.
Id.
Moreover, the Minarik indictment was defective in that it
set
forth only part of the conspiracy in which the defendants engaged.
Id.

Here, as in Mohney, the indictment provides in great
detail
who the conspirators are, what the full scope of their conduct was,
with
which government agency the defendants allegedly interfered
(i.e., FDA), and which of the agency's many functions the
defendants impeded (i.e., FDA's responsibility for
monitoring and
controlling the nation's food supply). See Indictment at pp.
2-19. In addition, the conspiracy count describes the manner in
which
the defendants interfered with FDA's duties. Count 1 expressly
states:

It was further part of the conspiracy that defendants
sought
to impair, impede, and defeat the FDA's efforts to monitor and
control
the manufacture and distribution of orange juice products in that
defendants attempted to cover up the addition of beet sugar,
preservatives, orange pulpwash, and other substances to products
sold as
orange juice from concentrate and concentrated orange juice for
manufacturing, and attempted to prevent government personnel from
uncovering those activities.

Indictment at p. 10, ¶ 6. Unlike the charge in Minarik,
the
government's charge here under the "defraud clause" gives the
defendants
more than adequate notice of their alleged offense. There can be no
confusion as to the government's theory of its case.

The second factor that the Mohney court determined to
be
unique to Minarik was the existence of a single statute that
applied to the defendants' activities. 949 F.2d at 904. In
Mohney, several statutes covered the conduct described in
the
challenged conspiracy count; therefore, the Sixth Circuit held that
the
government was justified in choosing the "defraud clause."
Id. at
905.

Here, too, the defendants' conduct implicates more than one
criminal offense. As the other objects of the conspiracy make
clear, the
defendants violated the FDC Act and the mail and wire fraud
statutes.
Other statutes, not charged or mentioned in the Indictment, also
apply
to the actions that underlie the alleged conspiracy. These would
include
the giving of false statements in violation of 18 U.S.C. §
1001. In
short, several other statutes define the wrongs that the defendants
committed here. It is thus proper for the government to charge, as
one
of the objects of the alleged conspiracy, that the defendants
sought to
defraud the United States by interfering with FDA's role in
overseeing
the food supply.

The final factor that the Mohney court identified as
being
unique to Minarik was the complex nature of the duties that
the
defendants had toward the government concerning the disclosure of
assets
before and after a levy to satisfy a tax delinquency. 949 F.2d at
905.
Here, the duties that the defendants owed the government were
straightforward and easy to discern: They had a duty not to
represent
their orange juice products as being something other than what
those
products really were, not to adulterate those products, and not to
conceal from FDA the true identity of the products that they were
placing into the nation's food supply.[FN4] Once again, the
situation in
Minarik is entirely distinguishable from that here.

FN4. XXXXXX maintains that the defendants' conduct was
"subject to extremely complex regulations." See XXXXXX
Dismiss
Mem. That is false. Only two regulations apply to this case: 21
C.F.R. {
146.145 and 21 C.F.R. { 146.153. These are the "standards of
identity"
for orange juice from concentrate and concentrated orange juice for
manufacturing, respectively. They are short and merely describe
what may
be in products that are labeled as orange juice from concentrate or
concentrated orange juice for manufacturing...